chapter 2

Question 1

Double-entry system

Answer 1

Each transaction must affect two or more accounts to keep the basic accounting equation in balance

Question 2

normal balance debit

Answer 2

Assets/Expenses/Dividends

Question 3

normal balance credit

Answer 3

Liabilities/ Equity/ Share capital ordinary / Retained Earnings/Revenues

Question 4

The Journal

Answer 4

1. Book of original Entry

2. Transactions recorded in chronological order

Question 5

The ledger

Answer 5

General Ledger contains all the asset, liability and equity accounts

Question 6

posting

Answer 6

Transferring journal entries to the ledger accounts

Question 7

the trial balance

Answer 7

1. is a list of accounts and their balances at a given time.

2. proves the mathematical equality of debits and credits after posting

Question 8

Trial balance may balance even when

Answer 8

1. A transaction is not journalized
2. A correct journal entry is not posted
3. A journal entry is posted twice
4. incorrect accounts are used in journalizing or posting
5. Offsetting errors are made in recording the amount of a transaction

Question 9

Currency signs

Answer 9

1. Do not appear in journals or ledgers
2. Typically used only in the trial balance and the financial statement
3. Shown only for the first item in the column and for the total of that column

Question 10

Uderlining

Answer 10

A single line is placed under the column of figures to be added or subtracted